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LOS ANGELES — Movie and music piracy thrives online in part because crafty website operators
receive advertising dollars from major companies such as Comcast, Ford and McDonald’s.

That’s the conclusion of several recent reports that shed light on Internet piracy’s funding
sources.

Content thieves attract visitors with the promise of free downloads and streams of the latest
hit movies, TV shows and songs. Then they profit by pulling in advertising from around the
Internet, often concealing their illicit activities so that advertising brands remain unaware.

Pirate websites run ads that are sometimes covered up by other graphics. They automatically
launch legitimate-looking websites as pop-up windows that advertisers don’t realize are associated
with piracy. At the end of the day, the pirate-website operators still receive a check for serving
up a number of views and clicks.

The illicit activity is estimated to generate millions of dollars annually. That’s only a small
share of the roughly $40 billion spent on online ads every year. Yet it is helping to feed the
creation of millions of copyright-infringing websites that provide stolen content to a growing
global audience.

Companies “placed their ads on the assumption that they were going to be on high-quality sites,
and they’re not,” said Mark Berns, vice president of MediaLink LLC, a consulting firm that produced
a study looking into the practice called “Good Money Gone Bad.”

The study, commissioned for the Digital Citizens Alliance, a Washington-based group that
advocates for a safer Internet, sampled 596 of the worst-offending websites. Researchers discovered
that the infringing websites were displaying ads from 89 premium brands such as Wal-Mart Stores,
McDonald’s, Google, Microsoft and Ford.

“It’s certainly fair to say that millions of dollars in revenue from premium-brand ads are
supporting content-theft sites,” Berns said.

That’s similar to an estimate from DoubleVerify, an online-fraud-protection company. According
to a DoubleVerify report released in May 2013, rogue website operators cheat mainstream advertisers
out of $6.8 million each month, mainly by “laundering” ad traffic in ways that are hard to
detect.

“There’s growing awareness of the unscrupulous tactics that sites will go to to collect their
dollars,” said DoubleVerify’s chief operating officer, Matt McLaughlin.

Several advertisers and top technology firms that operate ad networks — such as Google and
Microsoft — say the fraud is difficult to stop. Ads for Google’s Chromecast streaming device and
Microsoft’s Bing search engine were among those that appeared on pirate websites.

Microsoft said that although it monitors where its ads end up, it sometimes relies on others
bringing infractions to its attention “to take actions on non-compliant sites.”

Google said it invests significant resources to keep its and its partners’ ads from appearing on
pirate sites, and it requires users of its AdSense service to agree to its anti-piracy
policies.

“When we find violators of these policies, we’ll take the appropriate actions — including
blacklisting URLs and, in some cases, ending our relationships with publishers — as quickly as
possible,” a spokesman said in a statement.

Several companies listed in the report as having advertised on pirate websites declined to
comment, including Comcast, Ford, Toyota, McDonald’s, L.L. Bean, Cablevision, Time Warner Cable and
Target.

Dish Network said in a statement that it applies “industry-leading standards … to continually
take measures that prevent our advertising from appearing on pirate sites.”

Wal-Mart Stores Inc. spokesman Dan Toporek said the company blocked tvboxnow.com, a website that
the Alliance report found received its ads. Toporek said the Walmart logo might have been used by a
third party that wasn’t so careful.